Trading glossary
Short, plain-English definitions of the terms used in chart analysis, including the ones that appear in an Analytix-AI report. Each entry explains how traders use the idea and the most common mistake.
Levels and zones
ConfluenceConfluence is when several independent reasons point to the same price area, such as a support level, a Fibonacci level and a trendline.Measured moveA measured move projects a target by repeating a pattern's height, or a prior swing's length, from the breakout point.NecklineA neckline is the support or resistance line that a reversal pattern, such as head and shoulders, must break to complete.Order blockAn order block is the last opposite-coloured candle before a strong move, treated as a zone where large orders may have been placed.Supply and demand zonesSupply and demand zones are price areas where a strong move started, which traders watch for a reaction when price returns.Support and resistanceSupport is a price area where falling price has repeatedly stopped; resistance is an area where rising price has repeatedly stopped.TrendlineA trendline is a sloping line drawn through a series of rising lows in an uptrend, or falling highs in a downtrend.
Trend and structure
Break of structure (BOS)A break of structure is a move beyond the previous swing in the direction of the trend, which confirms the trend is continuing.Change of character (CHoCH)A change of character is the first break of a swing against the trend, an early sign the trend may be reversing.Higher highs and higher lowsHigher highs and higher lows are the swing points of an uptrend: each peak and each trough is above the one before it.Market structureMarket structure is the sequence of swing highs and lows that shows whether price is trending up, trending down or ranging.Multi-timeframe analysisMulti-timeframe analysis means reading the same market on a higher and a lower timeframe so that trade ideas fit the bigger trend.RangeA range is a market moving sideways between a clear high and a clear low, without making higher highs or lower lows.Swing high and swing lowA swing high is a peak with lower highs on both sides; a swing low is a trough with higher lows on both sides.
Price action
BreakoutA breakout is a move through a level, such as resistance, support or a pattern boundary, that price had previously been held by.ConsolidationConsolidation is a period where price moves sideways in a narrow range, usually between two clearer moves.Fair value gap (FVG)A fair value gap is a three-candle imbalance where the first and third candles' wicks do not overlap, leaving a gap the middle candle moved through.False breakoutA false breakout, or fakeout, is a move through a level that quickly reverses back inside it.Liquidity sweepA liquidity sweep is a quick move beyond an obvious high or low that triggers the orders resting there before price reverses.MomentumMomentum is the speed and strength of a price move, seen in candle size, closes and how far each swing travels.PullbackA pullback is a temporary move against the trend that does not break the trend's structure.RetestA retest is a return to a level price has just broken, to see whether it now holds from the other side.WickA wick, or shadow, is the thin line above or below a candle's body showing the highest and lowest prices reached in that period.
Indicators and tools
ATR (Average True Range)ATR measures the average range of recent candles, including gaps, usually over 14 periods, to show how much a market typically moves.DivergenceDivergence is when price and a momentum indicator such as RSI move in different directions, for example price makes a higher high while the indicator makes a lower high.Fibonacci retracementFibonacci retracement levels mark common percentages of a prior move, such as 38.2%, 50% and 61.8%, where traders watch for a pullback to end.Moving averageA moving average is the average closing price over a set number of candles, plotted as a line that smooths out price.RSI (Relative Strength Index)RSI is a momentum indicator from 0 to 100 that compares recent gains with recent losses, usually over 14 candles.
Risk
Invalidation levelAn invalidation level is the price that, if reached, proves a trade idea or pattern wrong.Risk-reward ratioThe risk-reward ratio compares how much a trade could lose, to its stop, with how much it could gain, to its target.Stop-lossA stop-loss is an order that closes a trade automatically at a set price to limit the loss if the market moves against it.
Market basics
LiquidityLiquidity is how easily an instrument can be bought or sold without moving its price; on charts the word also describes clusters of resting orders.PipA pip is the standard unit of price movement in forex: 0.0001 for most pairs and 0.01 for pairs quoted in Japanese yen.SpreadThe spread is the difference between the bid (sell) price and the ask (buy) price, a cost paid on every trade.VolatilityVolatility is how much and how fast price moves; high volatility means larger, quicker swings.
Educational content only, not financial advice. Chart patterns describe probabilities, not certainties, and every pattern can fail. See our disclaimer.